Land Transfer Tax & Potential Rebates

Certain things in Canada are non-taxable or their tax rate is zero, such as basic groceries or prescription drugs. However, when you purchase a property in Ontario, you will have to pay a Land Transfer Tax.

It can be quite a substantial sum of money, depending on the price of the property. We advise you to plan ahead and calculate this tax at the time of planning your budget for buying a home.

If you purchase land or an interest in land in Ontario you are required to pay the Provincial Land Transfer Tax. If you have purchased this land or an interest in land located in Toronto, you are required to pay the Municipal Land Transfer Tax in addition to the Provincial one.

The good news is that the first-time homebuyers of an eligible home may be eligible for a refund of all or part of the tax.

To claim a refund, you must be at least 18 years of age, you cannot have owned a home or an interest in a home anywhere in the world, and your spouse cannot have owned a home or interest in a home, anywhere in the world while he or she was your spouse. Previous ownership in a home means you do not qualify for the land transfer tax first-time homebuyers refund. The method of acquiring the home (e.g., purchase, gift or through an inheritance) is not relevant.

Qualifying taxpayers may claim an immediate refund at time of registration (assuming your registration takes electronic format).

Beginning January 1, 2017, the maximum amount of the refund is $4,000 and the maximum Toronto LTT rebate for first time buyers is $4,475.

Also beginning January 1, 2017, eligibility for the first‑time homebuyers refund program is restricted to Canadian citizens and permanent residents of Canada.

Purchasers who would otherwise be eligible for a refund, but who are not Canadian citizens or permanent res­idents of Canada when the transac­tion closes, have 18 months following registration to become eligible.

For more information about Provincial LTT call Ontario Ministry of Finance: 1-866-668-8297

And for more information about Toronto LTT call City of Toronto: 416-338-0338

MMA Law provides expert guidance for both Commercial Real Estate Law and Residential Real Estate Law Needs. We serve all of Ontario via remote video or in-home signing service as well as in person services at both of our Richmond Hill and Vaughan locations. Contact us today at 289.818.2772 Ext. 2772 or email to book your appointment today.

The content provided is for informational purposes only and in not legal advice. Do not rely on this content to make legal or business decisions. Always seek professional legal advice relevant to your situation.